HotspotShield is a company that encrypts all of your network traffic in exchange for inserting an ad into the top of web pages you visit. Your data passes through their servers, so itâ€™s not exactly secure from them, so if you have truly sensitive data, youâ€™ll need to consider that, though you will be safe from the guy at the next table running a sniffer program, capturing all of the wireless traffic, looking for passwords. (Anyone sharing the WiFi connection can do this, quite simply.)"

If you have not properly secured your home wifi, yes it would be reletively trivial to intercept everything you type/send/transmit.

Wireless best practices (not sure if this applies to mac stuff):
– use WPA or WPA2 encryption. WEP is not good enough anymore
– do not broadcast the network SSID. This keeps anyone who doesn’t know the name of network from easily locating it.

If you’re really paranoid, require all devices to be registered on the wireless network by MAC address.

SSID is something like a network name and is broadcasted by a WIFI access point so that devices can easily find it and connect to it. If you don’t have your own access point (like at your house or office) you don’t really need to care about it. If you do have one, it doesn’t really help a lot to turn it off since there is a number of tools that help to discover networks that are ‘hidden’ by not broadcasting SSID.

WPA or WPA2 encryption is also set on the WIFI access point. If you are just connecting to a random access point in a hotel or internet cafe you don’t really have a choice and it doesn’t really matter especially if the network is opened to public and doesn’t require any password. But if you have your own access point it’s a good idea to set the encryption to one of those. So on public networks, on any networks where you can’t control who has the access, I would strongly recommend using a VPN. And maybe even on your own network if doing critical online transactions or so.

I’m using Witopia for VPN and am quite happy with it. Even though it can get really slow sometimes but that’s the only way I can get to some sites from China. I would definitely recommend you using a ready-made VPN service like the one from Witopia, especially if you are not computer savvy. Setting up and maintaining your own VPN takes some knowledge and I don’t think saving the $60 a year is worth the trouble doing it yourself.